Captives Are Growing Rapidly for the Middle Market… but Why?

By May 9, 2017 July 31st, 2017 Business Insurance, Captives

The captive industry has been around for at least 60 years and in that time has shifted as a tool for only the Fortune 500 to utilize, to a tool that is now being used for companies with as little as $10 million in annual revenues.

It all began with the structure of a “single parent” captive where one company would form their insurance company for the sole purpose of insuring their own risk. Typically, these firms will spend $3 million or more in annual insurance premium “spend” and the annual expenses of managing the captive insurance company would be $100,000 and up.

We then witnessed the emergence of “cell” insurance companies, which go by various names (sponsored cell, protected cell, Series LLC, rent-a-cell, etc.), but target companies with premium spend around the $1 million level and expenses that begin at around $35,000 per year to manage. Below the $1 million premium level, potential insureds are guided toward “group captives” and have an entry point as low as $100,000 in casualty spend.

Download the White Paper we created below to learn more about beginning a Captive program for your company.